Tension rises between Coinbase and SEC over Celsius bankruptcy plan

Tensions between Coinbase and the Securities and Exchange Commission heated up Monday, following fresh concerns from the regulator about the crypto exchange's involvement in Celsius Network’s bankruptcy plan. 

Celsius plans to use Coinbase to distribute crypto for international customers and wants the court's approval for a series of agreements with the exchange, the SEC said in a Friday filing. 

"However, the Coinbase Agreements go far beyond the services of a distribution agent, contemplating brokerage services and master trading services that implicate many of the concerns raised in the SEC's District Court action against Coinbase," the SEC said. 

Coinbase and the SEC have been at odds, especially after the regulator issued a Wells notice to the exchange in March and later filed a lawsuit against it for operating as an unregistered broker and exchange in violation of federal securities laws. 

"Coinbase is proud to engage with Celsius to distribute crypto back to its customers. I wonder, why would the SEC object to a trusted US public company taking on this role?" Coinbase Chief Legal Officer Paul Grewal posted on X on Monday.

Celsius' legal woes

Celsius filed for bankruptcy last year and owes billions of dollars to investors. The SEC sued Celsius and its former CEO Alex Mashinsky in July for allegedly raising billions through fraudulent and unregistered sales of "crypto asset securities," repeatedly lying to investors about Celsius' financial standing, and manipulating the price of CEL, the company's native token. 

Others, too, have objected to Celsius’ plan over the past few days, including the U.S. Trustee which reiterated concerns from August over whether creditors have enough information to help them make an informed decision to approve the plan or not.